Military Spending Sets New RecordJune 08, 2009

 

Even as the global recession took a toll on civilian aerospace companies and airlines, the defense industry remained robust in 2008, according to an article by the BBC News.

Global military spending rose 4% in 2008 to a record $1.5 trillion, up more than 45% since 1999. The study of worldwide military spending was conducted by Sweden's Stockholm International Peace Research Institute, known simply as Sipri.

The wars in Iraq and Afghanistan were obvious reasons for the uptick. But arms spending also increased, with countries citing the "war on terror" as a justification. Peace keeping operations in places like Darfur and the Democratic Republic of Congo also boosted defense contractors.

The Sipri study provided the following statistics.

The top 10 global arms producers sold arms worth $347 billion in 2007 (the most recent reliable data):

1. Boeing ($30.5 billion)
2. BAE Systems ($29.9 billion)
3. Lockheed Martin ($29.4 billion)
4. Northrop Grumman ($24.6 billion)
5. General Dynamics ($21.5 billion)
6. Raytheon ($19.5 billion)
7. EADS ($13.1 billion)
8. L-3 Communications ($11.2 billion)
9. Finmeccanica $9.9 billion)
10. Thales ($9.4 billion)

About 61% of the $347 billion was sold by 44 U.S. companies. Thirty-two European countries accounted for about 31% of the total sales. Russian, Japanese, Israeli and Indian companies accounted for a small portion.

The United States remains the top purchaser of arms, according to Sipri 2008 figures, but China and Russia tripled their spending during this period:

1. U.S. ($607 billion)
2. China ($84.9 billion)
3. France ($65.74 billion)
4. UK ($65.35 billion)
5. Russia ($58.6 billion)
6. Germany ($46.87 billion)
7. Japan ($46.38 billion)
8. Italy ($40.69 billion)
9. Saudi Arabia ($38.2 billion)
10. India ($30.0 billion)

Russia continues to increase its military spending despite severe economic problems. Countries in the Middle East have cut back spending, but Sipri notes that this might be temporary given that many are planning major purchases in the near future and that rising oil prices could swell defense budgets.

Despite these rising numbers, Sipri forecasts some slower times ahead as the recession weakens even the wealthiest nations' ability to buy arms at recent levels. "Arms companies may face reduced demand in the future if governments cut military spending in response to rising budget deficits," the Sipri report noted.